EXHIBIT 12
DORSEY & WHITNEY LLP
PILLSBURY CENTER SOUTH
220 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402
July 14, 2000
Sit Large Cap Growth Fund, Inc.
4600 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4130
Sit Mutual Funds, Inc.
4600 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4130
Ladies and Gentlemen:
We have acted as counsel to Sit Mutual Funds, Inc. ("Sit Mutual
Funds") and Sit Large Cap Growth Fund, Inc. ("Large Cap Fund") in connection
with the proposed acquisition of all of the assets and all of the liabilities of
Sit Regional Fund ("Regional Fund"), a separately managed series of Sit Mutual
Funds, by Large Cap Fund, pursuant to an Agreement and Plan of Reorganization
dated as of June 1, 2000, by and between the Large Cap Fund and Sit Mutual Funds
on behalf of Regional Fund (the "Agreement").
Sit Mutual Funds and Large Cap Fund have asked us to render them our
opinion concerning certain federal income tax consequences of the exchange of
Large Cap Fund shares for the assets and liabilities of Regional Fund and the
distribution of such shares to Regional Fund shareholders upon liquidation of
Regional Fund, all pursuant to the Agreement (the "Reorganization"). In this
regard we have examined (1) the Agreement, (2) the Registration Statement on
Form N-14 (including, but not limited to, the Prospectus and Proxy Statement
included therein) filed with the Securities and Exchange Commission on or about
April 10, 2000, and such other documents and records as we consider necessary in
order to render this opinion. Unless otherwise provided herein, capitalized
terms used in this opinion have the same meaning as set forth in the Prospectus
and Proxy Statement or the Agreement, as the case may be.
Pursuant to the Agreement, all of the assets and all of the
liabilities of Regional Fund as of the Effective Time will be exchanged for
shares of common stock of Large Cap Fund having an aggregate net asset value
equal to the net value of the assets of Regional Fund at the Effective Time. All
Large Cap Fund shares then held by Regional Fund, representing all of the assets
of
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July 14, 2000
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Regional Fund, will be distributed to Regional Fund shareholders pursuant to the
Agreement in a liquidating distribution and all of the issued and outstanding
shares of Regional Fund at the Effective Time will be redeemed and cancelled on
the books of Regional Fund. In the distribution, each Regional Fund shareholder
will receive Large Cap Fund shares of a class corresponding to the class of
shares that he or she held in Large Cap Fund, with a net asset value equal at
the Effective Time to the net asset value of the shareholder's Regional Fund
shares as of such time.
The acquisition of all of the assets and all of the liabilities of
Regional Fund by Large Cap Fund is being undertaken because the Board of
Directors of each of Sit Mutual Funds and Large Cap Fund has determined that the
Reorganization is in the best interests of that Fund and its shareholders. In
approving the Reorganization, the Boards considered, among other things (as set
forth more fully in the Registration Statement), the facts that the small size
of Regional Fund made portfolio management difficult, that Regional Fund's
Midwestern geographic focus precluded Regional Fund from taking advantage of a
number of investment opportunities available elsewhere, and that Regional Fund
shareholders would experience a lower contractual management fee as a result of
the reorganization.
Our opinion is based upon existing law and currently applicable
Treasury Regulations, currently published administrative positions of the
Internal Revenue Service contained in Revenue Rulings and Revenue Procedures and
judicial decisions, all of which are subject to change prospectively and
retroactively. It is not a guarantee of the current status of the law and should
not be accepted as a guarantee that a court of law or an administrative agency
will concur in the opinion.
Based on the Agreement, the other documents referred to herein, the
facts and assumptions stated above, as well as representations made by Sit
Mutual Funds in a Certificate dated July 14, 2000, representations made by Large
Cap Fund in a Certificate dated July 14, 2000, representations made by Sit
Investment Associates, Inc., adviser to Large Cap Fund and Regional Fund, in a
Certificate dated July 14, 2000, the provisions of the Code and judicial and
administrative interpretations as in existence on the date hereof, it is our
opinion that the Reorganization will constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Code, and that Large Cap Fund and
Regional Fund will each be a party to the reorganization within the meaning of
Section 368(b) of the Code.
On the basis of the foregoing opinion that the Reorganization will
constitute a reorganization within the meaning of Section 368 of the Code, it is
further our opinion that:
(i) Regional Fund shareholders will recognize no income, gain or
loss upon receipt, pursuant to the Reorganization, of Large
Cap Fund Shares. Regional
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July 14, 2000
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Fund shareholders subject to taxation will recognize income
upon receipt of any net investment income or net capital
gains of Regional Fund which are distributed by Regional Fund
prior to the Effective Time;
(ii) the tax basis of Large Cap Fund Shares received by each
Regional Fund shareholder pursuant to the Reorganization will
be equal to the tax basis of the Regional Fund shares
exchanged therefor;
(iii) the holding period of the Large Cap Fund shares received by
each Regional Fund shareholder pursuant to the Reorganization
will include the period during which the Regional Fund
shareholder held the Regional Fund shares exchanged therefor,
provided that the Regional Fund shares were held as a capital
asset at the Effective Time;
(iv) Regional Fund will recognize no income, gain or loss by
reason of the Reorganization;
(v) Large Cap Fund will recognize no income, gain or loss by
reason of the Reorganization;
(vi) the tax basis of the assets received by Large Cap Fund
pursuant to the Reorganization will be the same as the basis
of those assets in the hands of Regional Fund as of the
Effective Time;
(vii) the holding period of the assets received by Large Cap Fund
pursuant to the Reorganization will include the period during
which such assets were held by Regional Fund, provided that
Regional Fund held such assets as capital assets as of the
Effective Time; and
(viii) Large Cap Fund will succeed to and take into account the
earnings and profits, or deficit in earning and profits, of
Regional Fund as of the Effective Time.
The foregoing opinion is being furnished to Sit Mutual Funds and
Large Cap Fund solely for their benefit in connection with the Reorganization
and may not be relied upon by, nor may copies be delivered to, any person
without our prior written consent. Our opinion is limited to the matters
expressly addressed in the eight (8) numbered paragraphs above. No opinion is
expressed and none should be inferred as to any other matter.
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July 14, 2000
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We consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement on Form N-14 and to the reference to
this firm under the caption "Information Relating to the Proposed Reorganization
-- Federal Income Tax Consequences" in the Prospectus/Proxy Statement included
in Part A of said Registration Statement.
Very truly yours,
/s/ Dorsey & Whitney LLP
BJS/WRG
